How Fintech Startup Jiraaf Is Helping Indians Diversify Their Fixed Income Investments

With an increasing number of Indians now turning to capital markets, the retail investment game in the country has gone through a paradigm shift in the last few years – thanks to digitisation and the rise of fintech startups such as Zerodha, Groww, and Upstox.

According to NSE data, retail shareholding in Indian companies clocked a near 15-year high in June 2022. Not only this, the share of Indian retail investors in listed equities grew from 36% in FY17 to 41% in FY22, states a market report published by Zinnov, a global management consulting & strategy advisory firm, in December 2022.

However, on the fixed income side, amid a dearth of options, many Indians are still stuck with traditional investment tools like FDs, PPFs, real estate, and gold.

It is this gap that led to the inception of Jiraaf in September 2021 – a fintech startup that offers individual investors access to an array of curated fixed-income products and a mix of asset classes, risk profiles, yields, and tenors for wealth creation – areas that were only accessible to high-networth individuals earlier.

“What triggered the birth of Jiraaf in the country’s growing fintech space was an untapped opportunity to cause disruption. We realised that there were no new investment opportunities in the market, especially on the debt side,” said the founders of the fintech startup, Saurav Ghosh and Vineet Agrawal.

The duo said that they then decided to develop a platform that can democratise access to new-age investments and is flushed with high-quality fixed-income opportunities that go beyond the aforementioned investment options, helping Indians diversify better.

Both Ghosh and Agrawal have corporate financing infused in the DNA of their careers. While Ghosh was the head of corporate finance and strategy at Ozone group and has extensively worked with names like The Wadhwa group, Feedback Infra, and Standard Chartered, Agrawal has spent years managing investments across real estate and hospitality portfolios as a senior associate principal at Piramal Fund and worked with the corporate team of Axis bank.

“We wanted to create a fixed-income place for individual investors. What we noticed as finance professionals was that fixed-income participation from individuals has been very limited in the past. Equity has performed very well, but debt or fixed income has not picked up,” Ghosh told Inc42.

To boost investments in this area, the founders, via their platform, offer corporate debt (rated and unrated), invoice discounting, real estate-linked debt, leasing and venture debt/revenue-based financing.

“The platform has a minimum investment rate of INR 1 lakh. These products allow the investors to create portfolios between yields of 8-20%,” the founders added.

Since its launch, the platform has onboarded 6,000 active transacting users. On average, customers are seen building a portfolio of INR 10 lakh.

“As a starting product, convertibles such as commercial paper, and invoice discounting have worked as good hook products for users,” Agrawal said.

When the founders started Jiraaf, they were concerned about the fact that people may not understand the investment opportunities easily.

“To our surprise, despite the complex nature of the term, people were able to understand it in the first discussion itself, which paved the way for faster adoption of the product,” Agarwal said.

Jiraaf Sticks Its Neck Out For Users

When inc42 inquired about the startup’s target audience, the founders said the platform targets savvy investors who already have their investments in traditional investment tools, have surplus savings every month and are looking to further diversify their portfolio.

“Our potential customers are the individuals who are earning more than 30 Lakh a year,” Ghosh said, adding that the startup aims to take alternative investment opportunities beyond high-net-worth individuals to more Indians.

The startup also works with companies that need debt for working capital. “We are one of the capital providers for such companies. We offer more customised solutions from a business perspective compared to traditional financial institutions,” Ghosh said. The startup is currently working with 40 such companies.

Its customers fall into two brackets – the individuals who make their investment decisions by themselves and others who rely on external financial advisors, Agarwal said.

The startup ropes in the first set of individuals via various digital channels. However, for the second set of individuals, Jiraaf has a strategic partnership and alliances team in place, which works with local financial advisors who have a team of 3-4 people with an INR 50-500 Cr corpus. Local financial advisors act as intermediaries and help build trust among customers.

“Equity market and debt market go through cycles. When we started, we were recovering from Covid and then we entered into a high-inflation environment because of the Russia-Ukraine war. All these factors impact the equity and debt market but you need to stay on the course,” Ghosh said.

For the first six months, the startup focussed on setting up the team and processes. In the following twelve months, it focussed on scaling up and moved from a hustle culture to a more process-driven environment.

“As we continue to innovate on the product, we aim to keep the needs of our customers in mind. As long as we are making decisions keeping our customers at the core of our offering, we end up doing the right things,” Ghosh added.

Spotting Opportunities From Afar

Last June, Jiraaf raised $7.5 Mn through equity financing in a Series A funding round, which was led by Accel Partners, Mankekar Family Office, and Dr Bhaskar Shah from Aspire Family Office.

While the platform currently has 6,000 active investors, it wants to take total numbers to 20,000-25,000 by the end of FY24. It also aims to break even within the next 12-18 months as founders claim the business has low cash burn.

“From an investor perspective, we are targeting individuals who are earning more than 30 LPA. As of today, there are more than 45 Lakh people in that income bracket. If we have 10 Lakh people investing INR 4-5 Lakh on average, we get to a scale of INR 40,000 Cr. We are looking at adding at least 5 to 10 lakh customers in the next five years,” Ghosh said.

According to an Anand Rathi report, the overall investments through alternative investment funds are expected to grow at a rate of 25% between 2022 and 2025. In the next five years, 60% of investors are expected to double their AIF allocation (from 5% to 10%, and 30% from 10% to 15%).